More Employers Offer Incentives for Health

WASHINGTON, DC -- Major U.S. employers using incentives to promote employer-sponsored health and wellness programs rose from 62 percent to 71 percent between 2007 and 2008, according to a recent survey by the ERISA Industry Committee (ERIC), the National Association of Manufacturers (NAM) and IncentOne.

Responses revealed a wide range in the value of incentives offered for a host of programs. For instance, incentives for weight management programs ranged from $5 to $500, and for smoking cessation programs from a low of $5 to a high of $600. The average value of incentives per person per year ranged between $100 and $300, with an overall average of $192 per person per year.

"More than three out of four major employers are using health and wellness programs in an effort to rein in costs that continue to soar year after year,” said John Engler, president and CEO of NAM. “But trinkets and T-shirts aren’t enough to motivate employees for the long term. Employers are keenly interested in innovative ways to lower costs and enhance productivity. Incentives are proving an effective tool to engage employees and keep them interested in these programs.”

Employers are experimenting with the types of incentives they offer, sometimes offering different incentives and amounts for different types of programs. Results of last year’s survey showed a skew towards offering premium reductions over other types of incentives. Gift cards came out on top in 2008 as the most popular incentive employers offer, with premium discounts and cash incentives following closely behind.

The survey of 225 major U.S. companies employing 7.6 million employees also delved into employer expectation for ROI for health and wellness programs, finding that 83 percent of those who have measured are seeing program returns of better than break-even. The percentage of employers who have successfully measured ROI for their health and wellness programs almost doubled since last year, but still remains less than 30 percent.

Employers are using other measures to evaluate program success, such as completion of health risk assessments and program participation. When it comes to incentives, employers are much more likely to reward program participation and completion than to reward employees for meeting specific program goals, such as smoking cessation or losing weight.

“More employers have learned that investment in their employees’ health is smart. It brings a positive return,” says ERIC President Mark Ugoretz. “But directing resources towards workers’ health must be balanced with an understanding of how incentives work within these programs. This survey shows that employers are serious about understanding the business case for incentives for employee engagement and participation. They want to make the most of these programs that can both lower costs and improve productivity.”